The Power of the State in German History Development and Political Economy
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The Power of the State in German History Development and Political Economy 1 Inaugural-Dissertation zur Erlangung des Grades Doctor oeconomiae publicae (Dr. oec. publ.) an der Ludwig-Maximilians-Universität München 2019 vorgelegt von Cathrin Mohr Referent: Prof. Davide Cantoni, Ph.D. Koreferent: Prof. Fabian Waldinger, Ph.D. Promotionsabschlussberatung: 24. Juli 2019 The Power of the State in German History Development and Political Economy 1 Inaugural-Dissertation zur Erlangung des Grades Doctor oeconomiae publicae (Dr. oec. publ.) an der Ludwig-Maximilians-Universität München 2019 vorgelegt von Cathrin Mohr Referent: Prof. Davide Cantoni, Ph.D. Koreferent: Prof. Fabian Waldinger, Ph.D. Promotionsabschlussberatung: 24. Juli 2019 Tag der mündlichen Prüfung: 04. Juli 2019 Namen der Berichterstatter: Davide Cantoni, Fabian Waldinger, Noam Yuchtman Für Matthias All ways, always Acknowledgments Throughout the process of writing this thesis, I was fortunate to have been sur- rounded and supported by many incredible and inspiring people who influenced me and my work. First and foremost, I would like to thank my supervisor Davide Cantoni, who helped me to become a better researcher since I was a research assistant at the Chair of Economic History. I am deeply grateful that his door was always open for all my big and small questions. Davide constantly encouraged me while at the same time challenging me to go further with my work. I would also like to extend my thanks to Fabian Waldinger, who gave me valuable comments on my thesis as my second supervisor. Thank you to Noam Yuchtman who has encouraged me since my Bach- elor thesis and kindly agreed to be my third committee member. Two chapters in this thesis are co-authored work. During this work, I have learned a lot from my co-authors Nico Voigtländer, Joachim Voth, and Matthias Weigand. I am thankful for the opportunity to work with them. Florian Caro, Elvira Eriksson, Marcel Knöchelmann, and Leonie Oberländer provided valuable research assistance. I gratefully acknowledge generous funding by the Egon Sohmen Graduate Center and the flexibility its scholarship gave me during the first years of my PhD studies. The CRC TRR 190 Rationality and Competitition provided me with funding after- wards. I am thankful to the Joachim Herz Foundation for the Add-On Fellowship, and I would like to especially thank Jan Brosse for his efforts and his hospitality in Hamburg. The EHA Exploratory Travel and Data Grant allowed me to search for data in different archives. During my PhD, I had the opportunity to explore new places while working on my research. I am thankful to Daniel Ziblatt who gave me the opportunity to spend several months at the Weatherhead Center for International Affairs at Harvard. The stimulating environment in Cambridge inspired me very much and influenced my work. I gratefully acknowledge funding by the Mobility Grant for Women of the CRC during my stay in the US. To collect data for my thesis, I have visited and con- tacted many archives throughout Germany. I would like to thank the archival staff at the Brandenburgisches Landeshauptarchiv, Bundesarchiv Berlin Lichterfelde, and the archive of the BStU in Berlin, and the staff in many regional archives that have willingly provided me with information. Working with the data from the housing census would not have been possible without invaluable support by Dorett Jenkel. Heiko Bergmann, Andreas Nickl and Nina Storfinger were always welcoming and provided me with all the help I needed. My colleagues at the Chair of Economic History and the LMU have been very supportive, helpful, and fun in the last years. My PhD experience would not have been the same without them, and I owe a sincere thank you to all of them. Daniel Wissmann and Mark Westcott were constant companions in the first years and I learned a lot from them. They were dearly missed after their graduation. Leonie Oberländer’s wit and support was always appreciated. Without Britta Pohr and her humor I would have been lost in a nightmare of Kafkaesque administrative forms. I am also indebted to many other colleagues, too many to name. I especially want to thank Edyta Bogucka, Tracy Dennison, Sebastian Link, Markus Nagler, Michael Specht, and Henrike Steimer for their continuing support and their belief in me. I also thank my parents Heike and Heiko, my sister Insa, as well as my parents- in-law Marga and Adi and my sister-in-law Hannah. I am unbelievable grateful for Benedict who brings so much joy to my life and puts everything into perspective. Most of all, I want to thank my husband Matthias to whom I dedicate this thesis. Without him all this would not have been possible and I am eternally grateful for his support and love. Contents Introduction 1 1 Carrots and Sticks: Targeting the Opposition in an Autocratic Regime 7 1.1 Historical Background . 13 1.1.1 Uprising of 1953 . 13 1.1.2 Housing in the GDR . 14 1.1.3 The National People’s Army . 17 1.2 Data . 18 1.2.1 Data Sources . 19 1.2.2 Summary Statistics . 23 1.3 Empirical Framework and Results . 25 1.3.1 Where Do Protests Occur? . 25 1.3.2 Carrots: Residential Construction . 30 1.3.3 Carrots: Robustness and Heterogenous Effects . 32 1.3.4 Sticks: Army Units . 38 1.3.5 Sticks: Stasi Presence . 42 1.3.6 Carrots and Sticks: Reactions in Housing to New Military Troops............................... 44 1.4 Mechanisms: Carrots and Sticks or Bureaucrat Quality? . 47 1.5 Conclusion . 51 A Appendix to Chapter 1 . 52 A.1 Figures . 52 A.2 Tables . 53 i Contents 2 The Rise of Fiscal Capacity 57 2.1 Introduction . 57 2.2 Literature and Hypotheses . 61 2.2.1 Definitions . 61 2.2.2 Determinants of Fiscal Capacity . 62 2.2.3 Effects of Fiscal Capacity . 65 2.2.4 Beyond Explaining European History . 66 2.3 Historical Background . 67 2.4 Data . 71 2.5 Determinants of Fiscal Centralization . 76 2.5.1 Results . 78 2.6 Effects of Fiscal Centralization . 80 2.6.1 Local Investments . 80 2.6.2 Warfare in Centralized Territories . 87 2.6.3 Vanishing of Territories . 89 2.6.4 Territorial Expansion . 94 2.7 Conclusion . 97 B Appendix to Chapter 2 . 100 B.1 Explanation of the Coding Process of Territories . 100 B.2 Figures . 102 B.3 Tables . 104 3 Exorcizing Hitler: Anti-Semitism and the Denazification of Ger- many 107 3.1 Introduction . 107 3.2 Historical Background and Context . 112 3.2.1 Weimar Period . 112 3.2.2 Denazification . 113 3.2.3 Anti-Semitism after Denazification . 115 3.3 Data . 116 3.4 Persistence . 120 3.5 Channels . 122 ii Contents 3.5.1 Lenience of the Denazification Tribunals . 123 3.5.2 Cooperation of Local Authorities . 125 3.5.3 Collective Guilt . 125 3.6 Robustness . 126 3.7 Conclusion . 128 B Appendix to Chapter 3 . 130 B.1 Figures . 130 Bibliography 134 iii List of Tables 1.1 Summary Statistics . 26 1.2 Where Do People Protest? . 28 1.3 Carrots: Difference-in-Differences Estimators . 31 1.4 Carrots: Protests and Construction with Controls . 34 1.5 Carrots: Heterogeneous Effects . 36 1.6 Carrots: Quality of Flats . 37 1.7 Sticks: Military Units . 41 1.8 Sticks: Stasi Presence in 1990 . 43 1.9 Reaction of Carrots to Sticks . 46 1.10 Channels: Chairmen of County Councils . 50 A.1 Carrots: Difference-in-Differences Estimators, Extended Sample . 53 A.2 Sticks: Military Units, Extended Sample . 54 A.3 Sticks: Stasi Presence in 1990, Extended Sample . 55 A.4 Channels: Chairmen of County Councils, Excluding City Counties . 56 2.1 Predicting Centralization . 79 2.2 Construction in Cities . 83 2.3 Centralization and Attacks on Cities . 90 2.4 Probability of Vanishing . 92 2.5 Territory Size . 96 2.6 Gains and Losses of Cities . 98 B.1 Centralized Territories and Dates of Centralization . 104 B.2 Attacks on Territories and Gains and Losses of Cities . 105 B.3 Territory Size . 106 3.1 Persistence of Anti-Semitism . 121 iv Contents 3.2 Potential Channels . 124 3.3 Robustness: Non-linear Model, Marginal Effects . 127 v List of Figures 1.1 Flat Construction per Capita at the Municipality Level . .9 1.2 Overall Flat Construction . 16 1.3 Protests during the Uprising of 1953 . 22 A.1 Flat Construction per Capita at the Municipality Level - Extended Sample . 52 2.1 Cities in our Dataset within 1937 Borders . 71 2.2 Territories in the Holy Roman Empire . 72 2.3 Number of Centralized Cities and Dates of Centralization . 74 2.4 Centralized Territories in the Holy Roman Empire . 75 2.5 Aggregate Construction over Time . 82 2.6 Differences in Construction over Time . 86 B.1 Number of Territories and Concentration of Cities . 102 B.2 Time Patterns of Construction, Intensive Margin . 103 3.1 Cemeteries and Occupation Zones in Germany . 117 B.1 Directive on Renaming of Hindenburg Streets . 130 B.2 Report on Local Tribunal in Büdingen . 132 B.3 Report on Local Tribunal in Ziegenhain . 133 vi Introduction Governments play a central role in shaping the lives of their constituents; they decide to whom to allocate state resources, they determine how taxes are raised to finance government spending, and they shape their population’s beliefs. Despite an extensive literature on these issues, important questions remain unan- swered. While economists have analyzed the drivers of and incentives for the allo- cation of resources in democracies, mechanisms of resource allocation decisions in autocracies are less clear. One important difference between these regimes is that autocratic governments not only allocate resources, but also tools of repression.